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SINGAPORE, SINGAPORE -- (Marketwired) -- 04/02/13 -- In his Market Brief of The Week for 1 April, leading global foreign exchange trader, educator and author Mario Sant Singh - whose views are widely sought after in the Forex industry, focuses on U.S. top tier data, wavering central banks, the Bank of Japan and Chinese reforms on housing and wealth management products.
Key Events to Focus On This Week
-- China's official Purchasing Managers' Index (PMI)-- U.S. ISM manufacturing PMI-- Reserve Bank of Australia (RBA) Official Cash Rate (OCR) decision-- UK manufacturing PMI-- Australia's trade balance-- BoJ monetary policy meeting-- Spanish 10-year bond auction-- European Central Bank (ECB) rate decision and press conference-- U.S. Automatic Data Processing (ADP) payroll-- U.S. Non-Farm Payroll (NFP)-- U.S. unemployment rate-- Tankan Index
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Source: Bloomberg, FXPRIMUS
Economic Insights
Engines driving weekly volatilities set to switch on amid heavy data and event risk
Cypriot banks reopened last week with strict capital control and possible banking restructuring in upcoming weeks or months. According to the latest statement, uninsured depositors could lose as much as 60% in the applied haircut. With the ongoing Cypriot and Italian saga, top tier data in the United States and central banks' wavering arrives.
Equities remain strong in the United States, but it is hard to explain whether it is the rising interest rate environment triggering a "bonds to stocks pipeline buildup" or value investing. Based on portfolio managers' fund movement, we have yet to see "bonds shifting to equities" since there is no evidence that heavy equities inflow is from the bond portfolio. On the other hand, bond market investors usually behave more patiently than other asset class managers due to the product's nature. However, high event and political risks around the world, especially in peripheral countries in the Euro Zone, scared some investors away.
This week, U.S. Non-Farm Payroll (NFP) and Institute for Supply Management (ISM) Purchasing Managers' Index (PMI) play key roles for the USD in the currency market. The Federal Reserve (Fed) gains limited attraction at this moment.
Earlier indications, such as Durable orders, offered a better outlook. However, consumer confidence and the Chicago PMI were not ignored and seemed to warn on the sequester effect. Durable goods orders surged by 5.7% in February, but it was largely driven by the volatile category of non-defense aircraft. The Chicago PMI also surprisingly printed on the lower side at 52.4 when expectation was much higher. Other regional manufacturing PMI posted stronger growth last month, indicating that the manufacturing pace might start to outperform the retail market.
With that, the ISM manufacturing PMI could jump to 54.5 according to my estimate, despite the mixed bag with the indicated regional manufacturing PMI. For non-farm jobs creation, the pace remains stable from the weekly perspective jobless claims in the past four weeks. The pace of the jobs growth might slightly lower to 200k in March from the previous 236k. Meanwhile, unemployment should remain at 7.7% unchanged.
